RIYADH, 27 June 2004 — The Communications and Information Technology Commission (CITC) announced here yesterday that it received applications from eight out of the 11 prequalified consortia in the bid for the second public mobile cellular services license for the Kingdom.
According to CITC, the applicants are Emirates Telecommunications Corporation (Etisalat); Vodafone and Saudi Partners Consortium (Vodafone); Kingdom Telefonica Consortium (Telefonica); MTC & Partners Consortium (MTC); MTN Saudi Arabia Consortium (MTN); Orascom Telecom Saudi Arabia Consortium (Orascom); Samawat Consortium (Telecom Italia Mobile); and Oger Telecom Consortium (Bouygues Telecom).
Three of the 11 consortia that prequalified in April, including Germany’s Deutsche Telekom, did not present final offers. A CITC source said Deutsche Telekom and Mobilkom Austria had unsuccessfully sought a postponement of the deadline. The third, Malaysia’s Maxis, was previously reported to have dropped out.
Next, in the first phase of the licensing evaluation process, CITC will evaluate the technical, commercial and operational proposals of each of the GSM applications. Applicants must achieve a minimum score of 85 percent to qualify for the second phase of the GSM licensing evaluation process.
In phase two, CITC will open the sealed GSM financial proposals in a public ceremony in the presence of the representatives of the qualified applicants. The highest financial proposal for GSM from a qualified applicant will make that applicant the “recommended applicant.”
The recommended applicant’s 3G proposal will also then be evaluated for technical, commercial, operational and financial proposals. At that point, CITC will make a final recommendation for approval by the Council of Ministers to award a GSM license or GSM plus 3G licenses to the recommended applicant.
CITC did not say exactly when the winner would be announced, but CITC officials have indicated that the winning consortium is likely to be chosen in late July or early August. The second operator, who will break Saudi Telecom’s monopoly over cellular services, must be announced by October, according to the government’s timetable. A third operator will enter the market in 2006.
Potential bidders had been required to form a consortium of at least five Saudi companies and an international mobile operator, with foreign investors allowed to buy up to 49 percent of the joint company to be set up to operate the new GSM. Twenty percent of the company operating the 25-year license must be sold off to the public, and a public offering for another 20 percent is required in the third year of operation.
Prince Alwaleed, who is partnering Telefonica of Spain, was recently quoted as saying the investment in the project could reach $1 billion.
In a related development, Samawat Telecom Italia Mobile has announced that it has reached a cooperation agreement with Japan’s mobile telecommunications giant, NTT DoCoMo, as part of its mega bid for the Kingdom’s second mobile telephone license.
NTT DoCoMo is the world’s largest provider of third generation telecommunications equipment and the first mobile telecommunications company in Japan. It caters for the needs of over 43 million subscribers. The company invented a technique known as W-CDMA and an improved version of I- Mode as well as Foma Service for ensuring high-quality mobile communications services.
The Samawat consortium includes Saad Group for Trading and Contracting, Kanoo Group, Ahmad Hamad Algosaibi & Bros., Haji Husein Alireza, Nesma Holding Co., Suhail Al-Shoaibi Group, Al-Mawarid Investment Group, NTG Saudi and Bin Sulaiman Holding Group. The consortium has pledged to invest up to $1 billion in the Kingdom’s telecom market under a phased program, according to Marco De Benedetti, the company’s CEO.
CITC has assured the public that there will be complete transparency in the opening of bids for the second mobile license. Bidders are keen to become the second GSM operator in the Saudi market, which has some eight million mobile users with a growth rate of about 30 percent.
An Arab industry report has predicted that revenues in the Kingdom’s GSM market will soar to $7.9 billion by 2007 on the back of the partial privatization of Saudi Telecom and increased competition. Although Riyadh is opening up the mobile sector to competition, Saudi Telecom will retain a monopoly over land lines and Internet services until 2008.
